DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTION), CIRCLE, JAIPUR V. GURUKUL SHIKSHAN SANSTHAN, SIKAR, SIKAR

ITA 44/JPR/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6201 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 12-01-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Capital asset; Depreciation; Capital receipt
• Section: 2

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA-@ ITA NO. 44/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 DCIT(E), CIRCLE, JAIPUR. CUKE VS. M/S GURUKUL SHIKSHAN SANSTHAN, OPP.- SHIV MANDIR CINEMA, FATEHPUR ROAD, SIKAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAATG 8671 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI (JCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 04/04/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 05/04/2018 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE REVENUE EMANATES FRO M THE ORDER OF THE LD. CIT(A)-1, JODHPUR, CAMP AT JAIPUR DATED 27/ 09/2017 FOR THE A.Y. 2011-12, WHEREIN THE REVENUE HAS TAKEN FOLLOWING GRO UNDS OF APPEAL: 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 84,82,000/-BY HOLDING THAT DEVELOPMENT FEES WAS UTILIZED FOR CREA TION OF CAPITAL ASSETS AND SAME CANNOT BE TREATED AS REVENUE RECEIP TS. 2) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND I N LAW THE LD.CIT(A) HAS NOT CONSIDERED THE FACTS THAT DEVELOP MENT FEE RECEIVED FROM THE STUDENTS/ PARENTS IS VIOLATION OF PROVISION OF ITA 44/JP/2018_ DCIT(E) VS M/S GURUKUL SHIKSHAN SANSTHAN 2 SECTION 11(1) (D) OF THE ACT AS IT WAS RECEIVED IN NORMAL FEE AND COMPULSORY FOR ALL THE STUDENTS. 3) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW THE LD.CIT (A) HAS NOT CONSIDERED THE FACTS THAT DEVELOPMENT F EE WAS MADE WITHOUT SPECIFIC DIRECTIONS OF DONORS/ STUDENTS AND FEE WAS COMPULSORY IN NATURE. 2. THE LD. CIT(A) HAS DELETED THE ADDITION BY HOLDING AS UNDER: 5.2. I HAVE CONSIDERED THE ASSESSMENT ORDER, APPE LLANTS SUBMISSIONS AND CASE LAWS RELIED UPON BY THE APPELLANT. THE APPELLA NT HAD CAPITALIZED THE DEVELOPMENT FEES OF RS.84,82,000/- RECEIVED BY TH E APPELLANT SOCIETY AS CORPUS FUND IN THE BALANCE SHEET, THE AO INCLUDE D THE SAME IN THE DECLARED GROSS RECEIPTS OF RS.8,06,70,964/- AND WOR KED OUT THE TOTAL RECEIPTS AT RS.8,91,52,964/-. THE APPELLANT HAS CON TENDED THAT AMOUNT RECEIVED FROM STUDENTS WHICH IS DIRECTLY CREDITED T O THE DEVELOPMENT FUND IS A CORPUS DONATION U/S 11(1 )(D) OF THE ACT AND THE ACTION OF THE AO IN TREATING THE DEVELOPMENT FEES RECEIVED FROM S TUDENTS AS REVENUE RECEIPT IS UNCALLED FOR & THE SAME BE DIRECTED TO B E CONSIDERED AS CORPUS DONATION, I.E. CAPITAL RECEIPT EXEMPT U/S 11(1 )(D) OF THE ACT. CONSIDERING THE FACTS OF THE CASE AND JUDICIAL PRECEDENTS CITED BY THE APPELLANT, I FIND FORCE IN THE VARIOUS SUBMISSIONS MADE BY THE APPELL ANT. IT IS SEEN THAT THE APPELLANT SOCIETY HAS RECEIVED DEVELOPMENT FEES FROM THE STUDENT APART FROM THE TUITION FEE, THE DEVELOPMENT FEES IS RECEIVED WITH THE CLEAR UNDERSTANDING THAT IT IS TO BE USED FOR CREAT ION OF CAPITAL ASSET NECESSARY FOR ACHIEVING THE OBJECTS OF THE SOCIETY, THE DEVELOPMENT FEES OF RS.84,82,000/- RECEIVED DURING THE YEAR IS DIREC TLY CREDITED TO THE CORPUS FUND OF THE SOCIETY, THE DEVELOPMENT FUND IS USED IN CREATING FIXED ASSETS, LIKE PURCHASE OF SCHOOL LAND, CONSTRUCTION OF SCHOOL BUILDING & OTHER CAPITAL ASSET OF THE SCHOOL, DURING THE YEAR, THE TOTAL DEVELOPMENT FEES RECEIPT IS RS.84,82,000/- WHEREAS THE TOTAL AD DITION IN THE FIXED ITA 44/JP/2018_ DCIT(E) VS M/S GURUKUL SHIKSHAN SANSTHAN 3 ASSETS IS OF RS.2,53,90,537/-. KEEPING IN VIEW ALL THESE FACTS, IT COULD BE CONCLUDED THAT THE DEVELOPMENT FEES IS UTILISED IN CREATION OF CAPITAL ASSET AND THEREFORE THE SAME CANNOT BE TREATED AS R EVENUE RECEIPT. CONSIDERING THE FACTS OF THE CASE, IT IS HELD THAT THE AO IS NOT JUSTIFIED IN TREATING THE DEVELOPMENT FEES OF RS.84,82,000/- AS REVENUE RECEIPT, THE SAME IS DIRECTED TO BE EXCLUDED FROM THE TOTAL RECE IPTS OF THE SOCIETY. THE GROUND NO. 1 RAISED BY THE APPELLANT REGARDING THIS ISSUE IS ALLOWED. 3. WHILE PLEADING ON BEHALF OF THE REVENUE, THE LD DR HAS SUBMITTED THAT THIS AMOUNT OF RS. 84,82,000/- WAS THE DEVELOPM ENT FEES AND WAS A REVENUE RECEIPT. IT WAS NOT A VOLUNTARY DONATION AS PROVIDED IN SECTION 11(1)(D) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT), WHICH PROVIDES FOR INCOME IN THE FORM OF VOLUNTARY CONTRIBUTION MA DE WITH SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS O F THE TRUST OR INSTITUTION. HE FURTHER PLEADED THAT THE GOVERNMENT HAS PRESCRIB ED THESE DEVELOPMENT FEES TO EACH AND EVERY COURSE TO BE PAI D BY STUDENT. THERE IS NO ALTERNATE OR SAY ESCAPE EXCEPT TO PAY THE DEV ELOPMENT FEE FOR GETTING THE ADMISSION. THEREFORE, SUCH AMOUNT RECEIV ED ARE NOT COVERED BY THE PROVISIONS OF SECTION 11(1)(D) OF THE ACT. TH E DEVELOPMENT FEE PAID BY THE STUDENTS IS A CLEAR IN VIOLATION OF THE PROVISIONS OF SECTION 11(1)(B) OF THE ACT. HE PLEADED THAT ORDER OF THE L D. CIT(A) DESERVE TO BE SET ASIDE. ITA 44/JP/2018_ DCIT(E) VS M/S GURUKUL SHIKSHAN SANSTHAN 4 4. ON THE OTHER HAND, THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION . HE SUBMITTED THAT THE TECHNICAL EDUCATION DEPARTMENT, GOVT. OF RAJASTHAN H AS SPECIFIED THE AMOUNT OF DEVELOPMENT FEE AND ALSO PROVIDED THAT TH E MANAGEMENT MAY CHARGE DEVELOPMENT FEE NOT EXCEEDING 15% OF THE TOT AL AMOUNT OF TUITION FEE. HE ALSO PLEADED THAT THE TECHNICAL EDUCATION DE PARTMENT, GOVT. OF RAJASTHAN HAS ALSO SPECIFIED THAT THE DEVELOPMENT F EE IS TO BE TREATED AS CAPITAL RECEIPT AND SHALL BE COLLECTED ONLY IF THE INSTITUTION MAINTAINS THE DEPRECIATION RESERVE FUND EQUIVALENT TO THE DEPRE CIATION CHARGED IN THE REVENUE ACCOUNTS AND COLLECTED UNDER THE RELEVANT H EAD AS WELL AS THE INCOME GENERATED FROM THE INVESTMENTS MADE OUT OF T HIS FUND. HE PRAYED TO SUSTAIN THE ORDER OF THE LD. CIT(A). 5. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. IT I S UNDISPUTED FACT THAT THE TECHNICAL EDUCATION DEPARTMENT, GOVT. OF RA JASTHAN HAS PRESCRIBED THE AMOUNT OF DEVELOPMENT FEES FOR VARIO US COURSES OFFERED BY THE EDUCATION INSTITUTIONS. FURTHER IT ALSO PROVIDE S THAT THE DEVELOPMENT FEES AS DECIDED BY THE TECHNICAL UNIVERSITY OF RAJA STHAN SHALL BE COLLECTED FROM THE STUDENTS BY THE INSTITUTIONS. IT IS ALSO P ERTINENT TO NOTE THAT THE TECHNICAL EDUCATION DEPARTMENT, GOVT. OF RAJASTHAN H AS ALSO PROVIDED THAT THE DEVELOPMENT FEE SO COLLECTED SHALL SERVE T HE FOLLOWING PURPOSES: ITA 44/JP/2018_ DCIT(E) VS M/S GURUKUL SHIKSHAN SANSTHAN 5 B. DEVELOPMENT FEE: DEVELOPMENT FEE SHOULD SERVE THE FOLLOWING PURPOSE S:- A. PURCHASES AND REPLACEMENT OF THE INFRASTRUCTURE . B. BETTERMENT, GROWTH AND UP-GRADATION OF THE INST ITUTION. C. SPECIAL AMENITIES TO THE STUDENTS. IT ALSO PROVIDES THAT THE DEVELOPMENT FEE SHALL NOT EXCEED 15% OF THE TOTAL AMOUNT OF TUITION FEE AND THE FEES COLLECTED ONLY IF THE INSTITUTIONS MAINTAINS THE DEPRECIATION RESERVE FUND EQUIVALEN T TO THE DEPRECIATION CHARGED IN THE REVENUE ACCOUNTS AND COLLECTED UNDER THE RELEVANT HEAD AS WELL AS THE INCOME GENERATED FROM THE INVESTMENTS MA DE OUT OF THIS FUND. FROM THE RECORDS, WE FIND THAT THERE IS NO CLEAR CU T FINDING REGARDING THE APPLICABILITY OF SECTION 11(1)(D) OF THE ACT. THE GU IDELINE PROVIDED BY THE TECHNICAL EDUCATION DEPARTMENT, GOVT. OF RAJASTHAN H AS NOT BEEN CONSIDERED. THEREFORE, IN THE INTEREST OF JUSTICE AN D EQUITY, WE FIND IT APPROPRIATE TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO BE DECIDED DE NOVO. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 05/04/2018. SD/- SD/- FOT; IKY JKO FOT; IKY JKO FOT; IKY JKO FOT; IKY JKO HKKXPAN HKKXPAN HKKXPAN HKKXPAN (VIJAY PAL RAO) (BHAGCHAND) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 05 TH APRIL, 2018. *RANJAN ITA 44/JP/2018_ DCIT(E) VS M/S GURUKUL SHIKSHAN SANSTHAN 6 VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE DCIT(E), CIRCLE, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- M/S GURUKUL SHIKSHAN SANSTHAN, SIKAR . 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 44/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. 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